The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

A civil rights attorney based in Washington, D.C., thinks he has the method for forcing changes in how and where St. Paul and Minneapolis locate low-income housing.

Michael Allen did not file a lawsuit against the cities and their joint Housing Finance Board. Instead, he filed a complaint with the federal Department of Housing and Urban Development that, if successful, could put tens of millions of dollars in block grant and other federal poverty grants at risk.

That’s not the result that Allen and the local complainants — the Metropolitan Interfaith Council on Affordable Housing and three Minneapolis neighborhood organizations — necessarily want. Rather, the groups bringing the complaint want the two cities to stop over-concentrating low-income housing in already impoverished neighborhoods. Doing so, even while assuring the federal government that they are not, is in violation of both the federal Civil Rights Act and the Fair Housing Act, the complaint says.

Asking HUD to investigate

The complaint, which was filed on March 30, alleges that policies in both cities limit “the development of affordable housing in high-opportunity, majority-white communities” and instead steer such units to “low-opportunity, high-poverty communities, furthering racial and ethnic segregation.”

According to the complaint, people of color are significantly more likely than whites to rent homes and significantly more likely to need affordable rental housing. Concentrating such housing in segregated areas has diminished the opportunities for members of those communities “to live in stable, integrated neighborhoods; by undermining the ability of public schools to remain integrated.”

The money at issue is substantial. Minneapolis received more than $36 million from HUD in 2012 and nearly $23 million in 2013, the complaint estimates. St. Paul received more than $20 million from HUD in 2012 and $12.5 million in 2013. The complaint asks HUD to investigate. If the federal agency find the cities in violation, it should require them to follow civil rights and fair housing laws or risk losing future federal funds, the complaint says.

“We hope it doesn’t get to the point where money is cut off,” Allen said. “They serve a lot of low-income people. But the price of admission is complying with civil rights requirements.” Allen says the complaint could bring a response from HUD in a few months.

***

New strategy to push local agencies

Allen said last week that the complaint process is a relatively new strategy to get HUD to push change on local agencies. Federal law has long required recipients of federal housing and community development money to certify that they are following the law. For years, Allen said, local governments assumed HUD would never challenge the validity of that certification. As a result, it became easier to put housing where it would be least resisted and not draw opposition from NIMBYs, he said.

That changed when civil rights attorneys like himself began challenging the certifications. In a challenge he brought against Westchester County in New York, Allen successfully argued that the county had falsely claimed it was meeting federal law. That led HUD to reach a settlement with the county that required it to build hundreds of low-income units in the whitest areas of the county and market them to people of color. Block grant money has been withheld when the county did not deliver on its promises.

Since that challenge, Allen said, HUD has been more assertive in making sure certifications for state and local governments across the county are accurate and that governments do what they’re supposed to do, which is to “affirmatively further fair housing.”

“It woke HUD and others up a little bit,” he said. “I’d like to think we showed HUD how it could do what it should have been doing all along.”

Allen said the purpose of such challenges isn’t to relocate all residents of low-income neighborhoods to higher-income areas. He said the purpose is to give residents a choice. Governments should both attempt to build up struggling neighborhoods and “give people a choice to get to places where streets are already safe and schools are already good.”

“Twenty years ago, the Twin Cities was one of the most progressive in providing a balance between those two. Those of us in the rest of the country were salivating to get some of what the Twin Cities had,” Allen said. That has changed, and now the region is “pretty dramatically segregated.”

Friday, May 01, 2015

Civil Rights Feds Tag City Of Fort Worth With Discrimination Lawsuit Alleging Violations Of FHA, ADA For Barring Use Of 4-Bedroom House As An 8-Person, Post-Treatment, Addiction Recovery Group Home; At Issue Are City Land Use Regulations & Failure To Grant Zoning Variance As A Reasonable Accommodation In Area Currently Residential-Zoned Permitting Up To Five Unrelated Persons Per Home

From the U.S. Department of Justice (Washington, D.C.):

The Justice Department [] filed a lawsuit against the city of Fort Worth, Texas, alleging violations of the Fair Housing Act and the Americans with Disabilities Act. The lawsuit, filed in U.S. District Court for the Northern District of Texas, charges that Fort Worth discriminated against persons with disabilities based on its treatment of a group home for persons recovering from drug and alcohol addiction, including the city’s failure to grant a reasonable accommodation to the owner of the group home.

The suit seeks a court order prohibiting future discrimination by Fort Worth and requiring Fort Worth to make a reasonable accommodation to permit the continued operation of “Ebby’s Place”(1) as a group home for up to eight individuals with disabilities. It also seeks monetary damages to compensate victims, as well as payment of a civil penalty.

This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by Ben Patterson, who through Ebby’s Place LLC, owns and operates the group home known as Ebby’s Place.

“The Fair Housing Act and the Americans with Disabilities Act seek to ensure that individuals with disabilities can live in communities of their choice without facing discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We will continue our vigorous enforcement efforts to make certain that persons with disabilities are granted their rights under federal law.”

“While we appreciate the City’s cooperation with this investigation, its refusal, as a governmental entity, to consider those recovering from drug or alcohol addiction as persons with disabilities is at odds with federal law,” said Acting U.S. Attorney John Parker of the Northern District of Texas. “Simply put, the residents of Ebby’s Place are deserving of the same protections as persons with any other disability.”

“Through our Office of Fair Housing and Equal Opportunity, HUD is working to ensure that housing options for persons with disabilities are not limited by restrictive zoning rules,” said Assistant Secretary Gustavo Velasquez of HUD’s Fair Housing and Equal Opportunity Office.

“Ebby’s Place[]” [is] a four-bedroom home for persons with disabilities recovering from drug and alcohol addiction. Ebby’s Place is [...] in Fort Worth, Texas, and is in an A-5, single-family residential zone. Ebby’s Place is home to between five and eight residents with disabilities. [...] Residents of Ebby’s Place have successfully completed at least a 30-day drug or alcohol treatment program, pay rent, and sign a contract to follow house rules. Residents are prohibited from using drugs or alcohol and must agree to mandatory drug testing. Residents must also work, seek employment, or attend school and must work with sponsors to maintain their sobriety.

Ebby’s Place residents share bedrooms, bathrooms, the living room, and the kitchen. They purchase their groceries together every week. They often eat meals and spend their free time together. A manager lives on site.

Five or fewer unrelated persons are permitted to live in an A-5, single-family residential zone as of right.

Thursday, April 30, 2015

Antitrust Feds Squeeze Two More N. California Investors Into Deals To Plead Guilty For Their Roles In Bid Rigging Racket At Courthouse Real Estate Foreclosure Sales; Suspects Bagged Now At 54 & Counting

From the U.S. Department of Justice (Washington, D.C.):

Two Northern California real estate investors have agreed to plead guilty for their role in bid rigging and fraud conspiracies at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed [] in U.S. District Court of the Northern District of California in Oakland against real estate investors Mark Roemer and Bradley Roemer. To date, 54 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.

In addition, 20 other real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties.

“Cynical investors who rig real estate foreclosure auctions will be held accountable for their crimes,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “Winning auctions through fraud injures consumers and mortgage lenders by circumventing the competitive process that the antitrust laws are intended to protect.”

According to court documents, beginning as early as December 2009 and continuing until about November 2010, the defendants conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Both defendants were also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to working these important cases and remains unwavering in our dedication to bringing the members of these illegal conspiracies to justice.”

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

[These] charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties in California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

Wednesday, April 29, 2015

Staten Island Man Gets Seven Years In Loan Modification Racket; Admitted He Tricked Two Homeowner/Couples Into Believing He Successfully Renegotiated Their Home Mortgage Terms, Then Duped Them Into Turning Over The Monthly Payments To Him For Remittance To Lenders; Scammer Illegally Pocketed Over $185K

From the Office of the Monmouth County, New Jersey Prosecutor:

A Staten Island man was sentenced [] to seven years in a New Jersey state prison for stealing more than $187,000 from a pair of homeowners over a 33-month period, announced Acting Monmouth County Prosecutor Christopher J. Gramiccioni.

Mario Coniglione, 51, of the Tottenville section of Staten Island, was sentenced by Monmouth County Superior Court Judge Anthony J. Mellaci, Jr., on two counts of second degree Theft and was also ordered to pay restitution in the amount of $187,562.40 to the two victims.

At his guilty plea in December, Coniglione admitted he took payments from a Freehold couple totaling over $100,000 paid to him while purporting to act as a "broker," deceiving the couple into believing he had renegotiated the terms of their residential mortgage with their lender.

Coniglione collected regular monthly payments from the couple, who believed the payments were being made towards their residential mortgage, and kept the payments for himself rather than forwarding the payments to the victim's lender.

Coniglione also admitted he stole more than $78,000 in mortgage payments from a Jackson Township couple in a similar scheme.

Tuesday, April 28, 2015

Toledo Feds Pinch Pair For Allegedly Clipping Homeowners For $1M+ In Loan Modification Racket; Suspects Allegedly Made False Promises To Trick Victims Into Making Monthly House Payments To Them, Then Pocketed The Cash Instead Of Applying Proceeds Toward Mortgages In Foreclosure

From the Office of the U.S. Attorney (Toledo, Ohio):

Two Toledo-area men were indicted for wire fraud related to stealing more than $1 million from hundreds of people through a fraudulent loan-modification scheme, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.

Indicted are Jason J. Keating, 36, of Toledo, and Christopher J. Howder, 37, of Perrysburg. They worked at Making Home Affordable USA (MHAUSA) from 120 10th Street in Toledo, where Keating was self-described president and Howder was the self-described underwriting manager.

The company used various names but homeowners were told MHAUSA had a very high rate of success and that customers could achieve modified interest rates as low as 2 percent, according to the indictment.

Prospective participants were told there was a flat fee for service, generally between $495 and $795. Participants were told to stop making monthly mortgage payments to their lenders and instead to pay a percentage of their mortgage to MHAUSA, according to the indictment.

Participants were told MHAUSA would hold these payments in a “stimulus reserve” account to demonstrate the participants could reliably make payments, and that once the loans were modified, the money would be turned over to the lenders, according to the indictment.

The money obtained through the fraud was spent on concession at professional sports venues, restaurants, cash withdrawals, gentlemen’s clubs, a tanning salon Las Vegas hotel, a jewelry store and a lingerie store, according to the indictment.

“These defendants took $1 million from people struggling to hold onto their homes,” Dettelbach said.

“They used money obtained through fraud to pay for expensive restaurants and vacations,” Anthony said.

Monday, April 27, 2015

Billionaire Banker Recovers $2.75M Deposit On 5th Avenue Apartment After Being "Shocked" Into Backing Out Of Purchase Contract By Rogue Co-op Board; HOA's 11th Hour Declaration That Buyer Would Not Be Entitled To Exclusive Use Of Penthouse Terrace Despite Provision In Governing Docs To The Contrary Dictated Return Of Money: State Appeals Court

In New York City, the New York Post reports:

A billionaire banker is about to get a few million dollars richer.

A Manhattan appeals panel ruled that Peruvian banking magnate Carlos Rodriguez-Pastor should get back the $2.75 million deposit he lost in a bid for a $27.5 million Fifth Avenue penthouse. Last March, a lower-court judge said Pastor had to forfeit the funds.

The South American financier backed out of the purchase in 2012, when the board suddenly ruled that his penthouse roof was a common area. That meant neighbors could traipse through his terrace to access the shared space.

The board at 1107 Fifth Ave. made the claim even though the proprietary lease awarded the penthouse owner exclusive use of the nearly 5,000-square-foot terrace, according to the decision.

“The lingering specter of a co-op board’s refusal to comply with the governing document’s provision regarding the owner’s right to exclusive access . . . would make any reasonable purchaser uneasy,” appeals Judge Rolando Acosta wrote in the unanimous, five-jurist ruling.(1)

When Pastor learned about the roof issue, he walked away from the deal and the seller pocketed the 10 percent deposit. Pastor sued. He later bought a 24.5 million pad in a different building.

The Board's position "came as a complete shock" to plaintiff. Although the Board notified the parties in June 2012 that it approved the sale (without imposing any conditions), it again sought to interfere with plaintiff's right of exclusivity when, in an August 2012 email, the Board proposed a "conditional consent agreement" to be signed by plaintiff and the Estate.

The owners of a Kings Mountain retreat center are suing San Mateo County in federal court, claiming it violated mandates to protect persons with disabilities by denying their proposal to turn it into a high-end rehabilitation center.

The lawsuit was filed in U.S. District Court for Northern California on March 25 by Downey Brand LLP attorneys, out of Stockton, on behalf of Stillpath Retreat Center LLC. The complaint focuses on the San Mateo County Board of Supervisors’ decision one year ago to uphold neighbors’ appeal of the Planning Commission’s approval of the project. In deviating from the commission’s support of the proposal, supervisors cited comments from neighbors of the Skyline Boulevard facility who voiced concern about fire dangers and potential strain on the water supply.

The center’s owners, Raymond Blatt and his father, Michael, purchased the property from Joan and William Porter for an undisclosed sum shortly after the Planning Commission’s approval but before the appeal was filed. It had been run as a meditation and spiritual retreat named Stillheart Institute.

Attorneys for the Blatts are asking the federal court to enjoin the county from unlawfully applying its land use regulations with respect to the property, discriminating against the proposed occupants and “from otherwise yielding to the prejudices and fears of neighbors of the property as to the presumed harm that persons with disabilities would bring to the neighborhood.” They are also seeking financial relief to cover damages and attorney fees and want a jury trial.

The claim cites the Fair Housing Act and Americans with Disabilities Act in support of the plaintiff’s argument that the county was discriminating against prospective tenants of the rehab center.

“The Board of Supervisors’ finding that the presence of recovering patients at the property would render it as ‘incompatible’ use was arbitrary and squarely contrary to the findings of the County Planning Commission … and was discriminatory and unlawful through its attempt to characterize and distinguish patients recovering from drug and alcohol addictions from other members of society,” an excerpt from the complaint reads.

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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